New A/C standard for leases to up financial info quality: ICAI
New Delhi: The new accounting standard for leases will bring substantial visibility of companies' lease commitments and improve the quality of financial information about companies, chartered accountants' body ICAI said
Monday. Ind AS 116, which sets out the principles for recognition, presentation and disclosure of leases has been notified by the corporate affairs ministry. The standard is effective from Monday.
A senior government official said the standard would affect all industries where leases are a predominant component in their businesses and result in more transparency.
ICAI President Prafulla P Chhajed said the new standard on leases ushers in a path-breaking reform in accounting for leases and would improve the quality of financial information.
"It will bring substantial visibility of companies lease commitments, financing and operating model and above all better reflects economic reality," he said in a release. Leasing is a well-known and long established form of obtaining finance.
The new standard on leases ushers in a substantial change in the accounting for operating leases by lessees and few improvements in the disclosure-related aspects for lessors accounting, according to the Institute of Chartered Accountants of India (ICAI).